The key variances were higher operating profit from the faster pace of profit recognition of residential projects (S$21m – some profit from The Arte was recognised this quarter), lower finance cost (S$17.3m), as well as lower tax (S$6.6m) and minority interests (S$10.5m). Residential development contributed 60% to earnings, whilst the 15% contribution from rental properties was slightly ahead of hotel earnings contribution, reflecting weak operating conditions. Net gearing was slightly lower at 46% on healthy interest cover of 10.1x. Adjusting for fair value gains on its investment properties, its gearing ratio would fall to ~35%.
Millennium and Copthorne (M&C) reported 2Q09 headline net profit of £16.4m, up from the £9m in 1Q09 reflecting strong cost initiatives in the face of flat hotel revenue. Overall occupancy rate was 67.6% versus 73.3% in 2Q08 with average room rate of £78.40 versus £79.38 over the same period last year. RevPAR as a result slipped 9% YoY to £53. RevPAR in July remains weak at an 18.3% YoY contraction, although signs of improvement are seen in Singapore and New York. We have already factored in a stronger 2H09 in our estimates.
The group plans to launch several projects in 2H09, including Hong Leong Gardens condo (396 units), the former Albany/Thomson Mansion sites (160 units) and possibly The Quayside Isle at Sentosa Cove, suggesting management is more positive than a quarter ago.
FY09 and FY10 EPS raised by 12% and 14%, respectively, updating for 1H09 results and presales at recent launches. We raise our target price to S$8.37, based on unchanged 10% discount to RNAV of S$9.30. The shares are factoring in more than 20% rise in residential prices over the next 12 months. It is fully valued, in our view, as the stock is trading at a 6% premium over our RNAV of S$9.30.
Sponsored Links
Comments
No response to “City Development - Fully valued”
Post Comments (Atom)
Post a Comment |
Post a Comment